Author: Noor Huda Ismail, Institute for International Peace Building
Prison regulations in Indonesia allow ‘good’ inmates to be released early on remission, a policy that can apply to people convicted of terrorism offences. But sadly, since 2002 at least 28 of the around 350 ex-combatants released have reoffended. This raises some important questions. After an ex-combatant has been released from prison, what causes him to re-offend? And what can society do to prevent this from happening?
The options for released ex-combatants are stark. Do they return to jihad or do they re-enter society to lead a normal life? In general, people convicted of terrorism offences are released into difficult social and economic conditions. They often lack education and find that their family does not support them. Without help, the there is a high risk that a former terrorist inmate will return to the jihadist community, where he will be protected and cared for.
My approach to this problem has been to engage directly with ex-combatants through a social enterprise initiative — a food business chain called Dapoer Bistik in Semarang and Solo, Central Java. Food can provide an excellent platform for nearly everyone to start engaging with each other. In Indonesia, food has been widely used to promote peace in the past. One example is the celebration of Padungku in Poso, where Muslims and Christians eat together to thank God during harvest time.
My first ‘client’ was Yusuf Adirima, a former Moro Islamic Liberation Front (MILF) fighter from Indonesia who was arrested in Semarang in 2003 for storing explosive materials. We first met that year when, in my former life as a journalist, I interviewed him in the Semarang Police Detention facility.
To engage people like Yusuf you must empower them. If Yusuf felt he had a reasonable control of his destiny, he would be less likely to return to radicalism. Through social and psychological engagement an individual’s commitment to and involvement in violence can be reduced to the extent that the risk of returning to violent activity will be low.
Drop-out students benefit from Dapoer Bistik too. Merely being employed is not everything for former terrorists — they need to feel they are a part of society again. So I encouraged Yusuf to start searching for drop-out students willing to work at the restaurant. This gave him a feeling that he was a useful member in the community because he was helping to solve one of Indonesia’s acute social problems: unemployment. Moreover, disenfranchised youths are always at risk of being radicalised. Now every decision Yusuf makes has a direct impact on other people’s lives. It’s harder for him to go back to clandestine activities and re-engage with his old network. Dapoer Bistik provided him with a new social network, one that gives him self-respect and dignity. Yusuf slowly became comfortable with his new life and started to invite other ex-combatants to join his new cause.
But, by themselves, individual programs like Dapoer Bistik can only have limited impact. The state needs to be involved as well. Indonesia can provide training that will help corrections officers to actively engage with the former inmates and support ex-combatants to find new callings in life. And it can get in contact with the families of former inmates, because parental and familial pressure can help steer the young men away from violence. This pressure may be overt or subtle. Parents who merely express sadness, dismay, fear or shame toward their sons can influence the choices they make in the future.
If the government is involved, it will gain more than just reassurance that the people it releases won’t return to terrorism. A former terrorist’s history and information can help provide important pieces of the mosaic of ongoing investigations — intelligence to prevent terrorist plots.
Some critics argue that governments should not directly engage former inmates convicted of terrorism offences, especially using the national budget, because the funds may be redirected for terrorism activities. There is the argument that terrorists should be locked away for life. The United States has implemented this policy, and terrorism offenders in American jails have no chance of rehabilitation. But while in Indonesia most arrested terrorism offenders will eventually be released, the existing system has insufficient funds, infrastructure and resources to their rehabilitation. This lack of post-detention care puts such inmates at risk of returning to violence because they are not being properly assessed and are receiving insufficient support to return to mainstream society.
I hope my modest work can be useful as a model that can be leveraged and tailored to fit different cultures and contexts. However, a significant amount of time and financial investment is needed, particularly for those newly convicted of terrorism offences. One person can help perhaps 10 ex-combatants at a time. But what if there was a network of capable volunteers and NGOs? Together, we would be able to reach out to many Yusufs and, through them, help many more former militants re-enter Indonesian society, so that they will not return to lives of violence. Such services would also contribute to part of the presumed role of the state. This is one way in which the Indonesian government needs to take a fresh look at its counterterrorism agenda.
Noor Huda Ismail is Founder and Executive of the Institute for International Peace Building, Jakarta.
Author: R. Harish, IBS, India
The Indian government recently decided to extend visa-on-arrival to 180 countries — hoping to provide a much-needed boost to tourist inflows. Previously, visa-on-arrival was available to the citizens of only 11 countries that account for just 7.5 per cent of tourist arrivals into India.
The extended visa-on-arrival facility is likely to be implemented in the coming October tourist season, after the necessary infrastructure is put in place. The Home Ministry had delayed the decision due to security reservations, and tourists from countries such as Afghanistan, Pakistan, Iran, Iraq and Sri Lanka will remain excluded from the provision.
Despite its continental proportions and the rich diversity of its tourist attractions, India has long remained a tiny dot on the world tourism map — receiving just 0.6 per cent of the world’s total international tourist traffic.
India accounts for only 1.6 per cent of world tourism revenues. In 2012, India received 6.6 million foreign tourists, whereas China received 57.7 million. Even many smaller countries in the region did much better — such as Turkey (35.7 million), Malaysia (25), Thailand (22.4), Saudi Arabia (13.7), South Korea (11.1), Singapore (10.4), UAE (9.0), Indonesia (8.0), Taiwan (7.3) and Vietnam (6.8).
Foreign tourist arrivals into India lingered in the range of 2.1 to 2.7 million for nearly a decade from 1995 to 2003. But following the ‘Incredible India’ marketing campaign, its share of world tourism rapidly improved to 5.1 million in 2007. This campaign projected an integrated image that increased India’s visibility in important source countries. But the growth in tourist inflows has slowed since 2007.
Will the new visa policy ensure that India achieves its target of nearly doubling foreign tourist arrivals to 12.6 million by 2016?
The liberalised visa policy can definitely help. But achieving the target would still be a tall order, unless there is a paradigm shift on other fronts. Industry insiders often point out that India needs more direct flight connections with major hubs in Europe and North America, and more hotel rooms — but these are not the primary constraints. Flights and rooms will follow as demand builds up.
There are essentially two things that India needs to concentrate on, if it is to develop into one of the world’s noteworthy tourist destinations — a position that it rightly deserves.
The first of these is that India’s tourist destination brand must be more focused. India seems to offer everything from deserts to evergreen forests, beaches to snow-clad mountains, ancient historical sites and pilgrim centres to modern-day urban hotspots. The flip side is that the diversity of claims makes the image of India very unclear to the prospective tourist.
This is in stark contrast to the distinct images that stand out in one’s mind when thinking of Spain, China, Turkey, Egypt, Thailand, Macau or even Saudi Arabia as tourist destinations. Perhaps one solution is to concentrate on what India is better known for — undoubtedly its history and culture — and proactively market the most attractive destinations to begin with.
An alternative would be to vigorously promote specific parts of India as distinct destinations in their own right. Kerala for example has a verdant landscape, azure backwaters and rejuvenating Ayurvedic treatments, while Rajasthan has royal splendour against the backdrop of a tropical desert.
The second important action point for India would be to dramatically improve infrastructure, cleanliness and upkeep. Tourists do not see just the temples, forts and palaces. They are also exposed to various other things, which make a deep impression on their minds and contribute to the overall experience.
While it would be a challenge to achieve the required transformation across the entire country, urgent steps must be taken to upgrade the sensory appeal of the environment in the most important tourist centres and the routes connecting them. Tourism cannot be developed in isolation of broader changes. The Tourism Ministry’s ‘Atithi Devo Bhava’ (Guest is God) campaign addresses some of the issues by promoting civic sense among the general public and good hospitality practices on the part of tourism service providers. But much more needs to be done, and on a war footing. Otherwise, the liberalised visa regime may bring in additional tourists who are more disappointed than pleased with what they see of India.
R. Harish is the Dean (Academics) at the IBS Business School, Bangalore, India.
Author: Ed Griffith, University of Leeds
The Sino–Japanese relationship has been in something of a tailspin for some time now. Since the Noda administration nationalised three of the Senkaku/Diaoyu Islands in September 2012, China and Japan have been at each other’s throats. The nationalisation sparked angry — sometimes violent — protests across China, while the political response was only slightly more measured. Increased activity of Chinese vessels and aircraft around the islands raised fears that a miscalculation could spark a conflict that nobody really wanted. This was underlined when a Chinese military vessel locked its radar onto a Japanese destroyer in the area in January 2013.
Thankfully, cool heads prevailed.
But this was not the end of the mutual provocations and recent months have witnessed a depressingly predictable reopening of old wounds. This has included a denial of the Nanjing Massacre by a board member of Japan’s national broadcaster. Most notably, Prime Minister Shinzo Abe visited Yasukuni Shrine on 26 December 2013 — becoming the first serving prime minister to do so in more than seven years. The last prime minister to visit during his tenure was Junichiro Koizumi who paid six visits to the shrine in five years. This brought Sino–Japanese political relations at the highest level to a virtual halt.
These events are taking place against the backdrop of Japan’s increasingly assertive foreign policy discussion that inevitably raises concerns in China.
To seasoned observers of Sino–Japanese relations, this could easily feel like déjà vu. Abe was an ardent supporter of Koizumi’s visits to the shrine and perhaps the biggest surprise is that he did not visit during his first spell in office after succeeding Koizumi in 2006. Similarly, the other historical slights are nothing new; diplomatic ‘slips of the tongue’ have dogged Japan’s relations with its neighbours for decades. The latest round of the Senkaku/Diaoyu dispute certainly looks serious, but so did many of the other incarnations of this thorn in the side of bilateral relations. From the fleet of armed Chinese fishing ships that approached the islands in 1978, to the lighthouse incident of 1996, and the more recent boat ‘collision’ of 2010, this issue has never gone away.
If the issues are not new, then neither is the pessimistic and occasionally hysterical tone of much of the commentary that has accompanied them. Predictions that the two countries were preparing for war in 2013 plainly did not come to pass. Still, just weeks into 2014 there are similar warnings circulating, including from a senior figure in the US Navy. Such predictions are understandable — they fit much of the short-term evidence and the academic discipline of international relations is so preoccupied with military conflict that it looks for it wherever relationships do not run smoothly — but they are consistently wide of the mark. The resilience of the Sino–Japanese relationship and its ability to withstand seemingly intolerable levels of discord should not be underestimated. It is easy to find possible causes of a conflict between China and Japan, but it is substantially more difficult to find evidence that senior decision-makers on either side would allow that to come to pass.
China’s increasingly assertive activity in the East China Sea and its declaration of the Air Defence Identification Zone are clearly matters of concern for anyone who cares about regional stability. Similarly, the increased willingness of leading Japanese figures to engage in insensitive acts and undiplomatic language over the thorny issue of history while continuing to push for constitutional reform can only further antagonise a sensitive China. So we should not dismiss recent events as just another round of Sino–Japanese cyclical tension.
China’s reaction to Abe’s Yasukuni visit might have appeared relatively restrained, but China reacted in much the way that it always has on this issue: with rhetorical indignation from relatively low level foreign ministry spokespeople and critical commentary in official media. The real cost to Abe of his shrine visit was to break what appeared to have become an institutionalisation of prime ministers staying away from the shrine. This certainly will harm his ability to conduct relations with Japan’s neighbours — in particular China — in any worthwhile manner for the remainder of his tenure.
Still, one of the most remarkable aspects of the damage done to the bilateral relationship by the Yasukuni issue under Koizumi was just how quickly it was repaired once he was out of office.
It certainly feels like Japan and China have been here before, but that is because they have. We should not casually dismiss the current situation as a storm in a teacup, but it benefits nobody — least of all China and Japan — to overplay the potential for the situation to spiral further.
Ed Griffith is a postgraduate research student at the University of Leeds, UK and a fellow of the White Rose East Asia Centre.
Author: Biswajit Ghosh, University of Burdwan
National and international pressure to address child trafficking in India has failed to produce results. The Supreme Court of India has also issued directives to the government to take the matter seriously. But there has been little effort to link increasing cases of missing children with the flurry of trafficking. The country is now faced with an epidemic of child trafficking — a recent Indian government report estimates that around half a million children have been abducted and forced to work in India’s cities.
It would seem that child trafficking is on the rise. In 2010, almost one in every three missing children was untraced. But in 2013 one in two missing kids was lost forever. India’s National Crime Records Bureau (NCRB) reported 65,038 missing children in the country in 2012. But the official agencies are limited in their ability to estimate the extent of child trafficking, and their estimates fall far short of those by researchers and activists.
India is now a destination, and a place of origin and transit for human trafficking. For two decades there has been a steady rise in the trafficking of children and women from the region due to increasing trans-border mobility. Yet the legal framework for tackling this borderless organised crime is very weak. Social workers also complain that law enforcement authorities often fail to deal with cases seriously.
The rights of trafficked children and women must be more judiciously protected. Victims mostly hail from poor, marginalised communities, and broken families. Even official statistics note that more girls vanish than boys. This is a worrying indication that child traffickers are getting smarter, as girls who are pushed into prostitution or domestic slavery are harder to trace than boys.
India does not have any precise and comprehensive legal structure to handle human trafficking. Trafficking in post-colonial India has mainly been linked to prostitution, but this ignores its complexity and changing character.
The official statistics on prostitution-related trafficking even show a declining trend. The total number of cases under the Immoral Traffic (Prevention) Act, 1956 decreased from 11,242 in 2002 to only 2,563 in 2012, possibly because labour trafficking to domestic and commercial sectors is now easier than sex trafficking.
But for the same period NCRB data shows an increase in instances of child trafficking for the crimes of ‘procuration of minor girls’, ‘importation of girls from foreign country’, ‘selling of girls for prostitution’ and ‘buying of girls for prostitution’. Cases under these crimes collectively increased from 214 to 991.
Clearly, care is needed when explaining and solving trafficking in the age of globalisation.
But there is little effort on the part of the official agencies to link up child trafficking with cases of abduction, forced labour, child labour and child marriage. 18,266 children were abducted in 2012. Yet the justice system fails to punish most offenders. The average conviction rate for these crimes was just 11 per cent in 2012. Anti-trafficking laws focus on sexual exploitation and have ignored more recent reasons for child trafficking. These include domestic, commercial, industrial or bonded labour; tourism; and other forms of exploitation, such as organ sale, adoption, begging, criminal activity or camel jockeying.
Despite legal prohibition, India continues to have 12.66 million child labourers. Cases of labour migration in post-liberalised India are also linked to child trafficking. Child marriage is also considered to be a major modus operandi of child trafficking and there has hardly been any respite from this rampant social evil even after the passing of the Prohibition of Child Marriage Act, 2006. Clearly, any attempt to measure the extent of child trafficking in India would be baffling as the figure would be close to one million a year.
Is this not an epidemic? Wake up India — it’s time to think seriously!
Child trafficking is not merely a socio-legal issue; it is a symptom of much deeper issues in Indian society. As these issues are multi-dimensional, their solutions also lie in a multi-dimensional approach. As human transportation takes place often with the victim’s and their family’s tacit knowledge, detecting a victim and the agents involved — and the task of prevention — is very challenging. Hence, a comprehensive strategy needs to be drawn up to fight the crime. This strategy should include steps such as employment and capacity development, education and empowerment, administrative and community actions, and cooperation among stakeholders to make human rights accessible to the victims.
This problem has many stakeholders, across government, business and society, and all have an important role to play in minimising the vulnerabilities of children and women.
Dr Biswajit Ghosh is a Professor of Sociology at the University of Burdwan, West Bengal, India.
Author: Eric Loo, UOW
Malaysians are evidently freer today to openly criticise their government than they were prior to 1998.
Instead, Malaysians have a government focused on achieving a high-income developed-nation status by 2020 while eschewing the cultural prerequisites of a normative democracy — freedom of access to public information, free and fair elections, vigilant media and press freedom.
Civil societies had a glimmer of hope when Najib Abdul Razak was sworn in as the country’s sixth prime minister in April 2009. Addressing journalists at a media awards night in Kuala Lumpur, Najib said: ‘If we are truly to build a democracy that is responsive to the needs of all the people, we need a media — both old and new — that is empowered to responsibly report what they see, without fear of consequence, and to hold governments and public officials accountable for the results they achieve or do not achieve’.
The Centre for Independent Journalism and Writers Alliance for Media Independence submitted to Najib on 3 May 2009 a roadmap setting out the directions for media freedom and democracy. But roadblocks remain. Worrying recent cases include the suspension, later lifted, of The Heat in December 2013 for a series of reports on the prime minister and his wife’s extravagance; the revocation of the printing licence of FZ.com in August 2013; and the denial of a printing licence to the online news portal Malaysiakini, a decision reversed by the High Court in October 2012.
There have been some advances. Freedom of information laws were passed in the Opposition-controlled states of Selangor and Penang in 2011, which allowed for the disclosure of public information. But amendments to the Penal Code, a federal law that prohibits the leaking of government information to the media, and the Official Secrets Act, render the FOI legislation practically meaningless.
A combination of structural, political, legal and professional factors have led to a fragmented and unbalanced media landscape. Media companies and conglomerates are owned by political parties, leading to partisan political reporting. Establishment newspapers are increasingly deviating from fair treatment of public interest issues. Libel suits against the mainstream papers (for example,Anwar Ibrahim vs Utusan Malaysia; Suaram, Bersih & CIJ vs New Straits Times ) have seen the media losing cases. The media market is also divided along technological lines: a content analysis of the general election coverage in May 2013 shows the mainstream media are explicitly pro-government and online news portals generally pro-Opposition.
The media market is also segmented by ethnicity and language, although the mainstream English language papers are widely read. Vernacular papers, accessible online, cater to the communal interests of those who speak Mandarin, Tamil and Bahasa. Language, ethnicity, religion and politics in the Malaysian context are inextricably linked, and since senior journalists and editorial policymakers in the mainstream papers, television and radio are predominantly Malay, these considerations do creep into the editorial process.
For instance, in a commentary in the Bahasa national daily Utusan Malaysia, the president of the National Association of Malay Journalists (NAMJ) and Writers of Malaysia, Alias Mohamed, wrote that if Malay leaders continued to accommodate the Chinese, they would risk losing their Malay authority and political leadership. Alias Mohamed’s emphasis on ‘Ketuanan Melayu’ (‘Malay Lordship’ commonly reinterpreted as ‘Malay supremacy’) could legitimise a hegemonic framework that NAMJ members could arguably see as acceptable in framing their coverage of racial and religious controversies, such as the Bumiputera economic agenda, preferential treatment policies, the child conversion (to Islam) bill, the ban on Christian churches from using the word ‘Allah’, and the post-election power relations structure.
Najib has attempted to demonstrate his commitment to accountability and transparency on his 1Malaysia blog. He remarked that ‘democracy is not just about elections, it is about addressing the needs of the people in between elections — and that means getting unfiltered, first-hand information through meetings, visits and social media about the things you really care about’. As Najib promised in 2009, the government repealed the Internal Security Act (ISA) in September 2011.
But the ISA was replaced by equally repressive measures in July 2012 by amendments to the Evidence Act 1950 and the Security Offences (Special Measures) 2012 Act, which provides for the detention of suspects for 28 days compared to indefinite detention without trial under the ISA. In the same month, the Printing Presses and Publications Act was amended whereby newspapers no longer need to apply for an annual renewal of printing permits, but which the home minister at his discretion can unilaterally revoke or even deny the right to apply for a permit. Malaysiakini and Fz.com are recent examples.
It has been one step forward and two steps back for media reforms, greater accountability and transparency under Najib’s administration.
Author: Richard Katz, TOE
Once again, talk of an ‘India boom’ has emerged in Japan.
This year, India came in second (behind Indonesia) in a government survey on the top countries in which Japanese firms want to set up operations in the medium term and first in the long term— and, at last count, nearly 1000 Japanese firms had already set up there. Some of these new firms are suppliers to Japanese companies who already have operations in India.
Japan abounds with talk of sales to the burgeoning Indian middle class — often said to amount to as many as 300 million people. The Suzuki Maruti joint venture, which has a 37 per cent market share, will be joined by a major campaign from Honda. And Panasonic unveiled a new line of air conditioners (AC) for the Indian market — raising its share of the Indian AC market to 15 per cent in 2013, up from only 3 per cent in fiscal 2009. It wants to overtake South Korea’s LG Electronics — the largest consumer durables maker in India. As more Indians can afford ACs, the market is growing at about 35 per cent per year.
In 2011, India and Japan signed a bilateral free trade agreement (FTA) that will end tariffs on goods accounting for 94 per cent of their trade flows over 10 years. And Prime Minister Shinzo Abe is now making diplomatic forays to India as he tries to build close ties to other countries that feel threatened by China.
Yet the oft-expected boom in Japan–India economic ties has repeatedly failed to come to fruition. Trade with India forms a tiny part of Japan’s global imports and exports. In April–September 2013, Japan’s exports to India amounted to a miniscule 0.14 per cent of its entire global exports, and imports from India in 2013 amounted to just 1.1 per cent of Japan’s global imports.
Meanwhile, Japan’s FDI into India forms a tiny portion of its global FDI. India is less important to Japan than Japan is to India, particularly as a source of FDI. During 2000–13, Japan supplied, on average, 7 per cent of total global FDI into India, and in 2013 was the third-largest investor in India at 8 per cent.
Japanese experts like Joichi Kimura, chief at the government-affiliated Japan Bank for International Cooperation’s (JBIC) office in New Delhi, often point to India’s poor infrastructure as a reason for the relatively low rate of Japan’s FDI into India as well as bilateral trade. India’s infrastructural deficiencies in communication, transport and energy have created a major bottleneck to maintaining the higher growth path it has achieved in the past two decades.
Japan is now working with India to improve India’s industrial infrastructure, not just to increase commerce directly between the two countries but also to help India become a hub in the multi-country supply chain that spans the Asia Pacific.
Japan is involved in India’s gigantic Delhi–Mumbai Industrial Corridor Project, a State-Sponsored Industrial Development Project, which aims to develop a 900-mile industrial zone with a 4000-megawatt power plant, three seaports and six airports spanning six states. The two countries signed an agreement to set up a project development fund, with the aim to build the fund to US$10 billion. The hope is to create 3 million mostly industrial jobs, triple industrial output from the region and quadruple the region’s exports within five years.
India also lacks world-class manufacturing capability: another reason multinational corporations (MNCs) have not looked upon it as a potential supply base along the lines of China, Thailand and Malaysia. Again, as in infrastructure, Japan is very skilled at manufacturing and, in a host of countries, FDI from MNCs has improved industrial capability by upgrading the skills of workers and the technological prowess of indigenous firms used as suppliers to the MNC’s factories.
Japan could benefit from the software capacity shown by India and Indians in America’s Silicon Valley and abroad. Japan, which has focused on custom-made software, has not been able to step up to the plate to produce software for exports. Japan needs to work with Indian firms or help Indians set up their own firms within Japan to become providers, rather than just hiring individuals who may be absorbed in a firm’s traditional way of doing things.
With so many opportunities, why haven’t we seen better growth in trade and FDI between Japan and India?
Traditionally, Indians, like Japanese, feared that too much inward FDI would mean a quasi-colonisation of India on the economic front. Despite a quantum leap in FDI into India, foreign firms say the road to such investments is still filled with tacks, including in the key bottleneck areas of communication, energy and transport.
Also, items that don’t fit Japan’s needs dominate India’s exports. Out of a total of US$300 billion in exports in 2012, its biggest export was petroleum products at US$56 billion (20 per cent of the total). But Japan’s own refiners dominate the production of petroleum products and so Japan imports little. Until India becomes much more adept at exporting manufactured goods, Japan and Japanese affiliates overseas will not be a good market for Indian exports.
Japanese firms also prefer to import manufactured goods from their own affiliates overseas rather than from indigenous firms. Japanese affiliates in Asia have accounted for the lion’s share of Japan’s increase in manufactured goods from Asia over the past decade. Japan’s Ministry of Economy, Trade and Industry calls these goods ‘reverse imports’, and they have almost doubled from 15 per cent of Japan’s total manufactured goods imports in 2001 to 27 per cent in 2012.
Meanwhile, out of India’s US$490 billion in imports in 2012, only 13 per cent of the top items were in product areas where Japan has comparative advantage. This is the import structure of a poor country, not a newly industrialising one. Until this import structure matures, the market for Japanese exports will be limited.
Finding ways to make increased Japan–India economic cooperation possible will result in internal reforms that help each country grow. In virtually every country where reform has been successful, increased globalisation — trade and inward FDI — has been a pivotal ingredient in the recipe. Globalisation breaks down the collusion among vested interests that impedes growth.
India has made much more progress globalising than Japan. India’s cumulative stock of inward FDI soared from only 0.5 per cent of GDP in 1990 to 10.4 per cent today. By contrast, during the same period, inward FDI stock in Japan only rose from 0.3 per cent to 3.4 per cent of GDP. Also, India’s trade–GDP ratio has risen from 15 per cent in 1990 to 55 per cent today, while Japan’s trade–GDP has risen more slowly from 20 to 30 per cent.
India has been, and remains, a tiny part of Japan’s global trade. At the same time, Japan is a relatively minor trading partner for India, accounting for just 2 per cent of India’s exports and 2 per cent of its imports. Unless India overcomes infrastructural deficiencies, and Japan overcomes structural flaws — resisting imports from competing firms — the ‘boom’ in economic relations may remain just talk.
Richard Katz is Editor at The Oriental Economist Report.
A version of this article first appeared in the January 2014 edition of The Oriental Economist Report.
Author: James J. Fox, ANU
Java could lose up to six million tons of rice in 2014, unless something is done immediately to regulate and reduce pesticide use.
Brown planthopper populations have exploded due to the overuse of insecticides that destroy the planthopper’s natural enemies. This is a serious threat to Java’s rice production for 2014.
On 13 January, the Department of Plant Protection at Indonesia’s prestigious Institut Pertanian Bogor (Bogor Agricultural University) issued a press release to call attention to this threat, which was identified by intensive field research in Java’s 2013 cropping season — a litany of Java’s main rice producing areas particularly in East and Central Java were affected.
The brown planthopper, Nilaparvata lugens Stal, is a miniscule, fast breeding insect that lodges in the stalks of rice plants. It feeds directly on the rice plant and in large numbers is capable of sucking the life out of extended fields of rice, causing what is called ‘hopperburn’. The brown planthopper is also a carrier of two destructive rice viruses: ragged stunt virus and grassy stunt virus, either of which can be as devastating to a rice crop as the brown planthopper directly feeding on it.
With the onset of the rainy season, planthopper populations are forecast to explode in number, spread and become even more devastating.
Brown planthoppers are exceedingly difficult to predict and control as populations increase. It can produce both fully winged forms and partially winged forms. The partially winged forms are enormous breeders, each producing up to 350 eggs in roughly two weeks. Fully winged forms, though they produce fewer eggs, are exceptionally mobile and can migrate considerable distances. This produces a potent combination of local super breeders and equally remarkable migrants. Still, scientists have identified nearly 100 natural enemies that prey on the brown planthopper. These natural enemies range from hunter spiders that are easily observed to the tiniest of parasitoids that effectively prey on brown planthopper populations. But they, rather than the planthopper, are especially vulnerable to a great variety of general and systemic pesticides.
Indonesia has suffered a number of increasingly serious outbreaks of brown planthopper since the uptake of new rice technologies in 1967. Its first serious infestation occurred during the 1974–75 planting season, followed by a succession of further outbreaks culminating in a particularly severe outbreak in 1985–86. In response, President Soeharto issued a presidential order that banned 57 organophosphate pesticides used at the time. For a period of some 20 years thereafter Indonesia enjoyed substantially reduced pesticide use and a steady uninterrupted increase in its rice production — with only limited and localised outbreaks of the brown planthopper.
But in 2002, a time of reformation, pesticide policies were changed and the country was opened up to a flood of pesticides, many originating in China. As pesticide use increased, the brown planthopper returned with a vengeance. A build-up of brown planthopper populations that began in 2009 led to the loss of more than 1.96 million tons of rice across Java in 2011. Java is now facing an even more intensive and widespread build-up, which is the reason for the urgent press release by the Department of Plant Protection at the Institut Pertanian Bogor.
The press release summarises field evidence that shows a direct correlation between the number of pesticide applications and the damage to rice fields caused by the brown planthopper in infected areas. The more farmers spray, reducing natural predators, the greater the extent of ‘hopperburn’.
During the New Order, pesticides for rice were limited to a few chemical formulations, mainly organophosphates. Now the situation is vastly different. Dozens of chemical formulations are available to farmers, including varieties of neuro-active insecticides or neonicotinoids, numerous synthetic pyrethroids and even a range of organophosphates that are technically prohibited for rice. These different chemical formulations are sold under thousands of catchy brand names and actively promoted by suppliers’ agents. Many farmers mix a cocktail of different pesticides and some spray their field up to nine times in a single season.
Major rice producers like Vietnam have forbidden many pesticides, reduced the use of others and introduced biological methods to encourage the increase of the brown planthopper’s natural predators. But Indonesia has seen only an increase in the use of pesticides on rice.
So, another bold presidential order is needed to regulate pesticide use in the country and to promote modern biological technologies that effectively control brown planthopper populations.
James J. Fox is Professor Emeritus in the Resource Management in Asia-Pacific Program, Crawford School of Public Policy, the Australian National University.
Author: Tessa Morris-Suzuki, ANU
For the past year, Northeast Asia has been in the grip of a worsening spiral of tensions, provoked by territorial disputes and nationalist statements by political leaders. Careful diplomacy to defuse the deepening crisis is urgently needed. So the announcement by Japan’s Chief Cabinet Secretary Yoshihide Suga on 28 February that the Japanese government intends to ‘review’ the Kōno Declaration was greeted in many quarters with an astonishment that borders on disbelief.
The Kōno Declaration, issued in August 1993 by then Chief Cabinet Secretary Yōhei Kōno, was widely seen as a landmark step towards reconciliation between Japan and its Asian neighbours, particularly South Korea. The declaration followed a government review of evidence that during the Asia Pacific War the Japanese military operated an empire-wide system of military brothels — so-called ‘comfort stations’ — to which women were recruited, often by deception or force. In the words of Kōno’s formal statement, the study ‘revealed that in many cases [the comfort women] were recruited against their own will, through coaxing coercion, etc, and that, at times, administrative/military personnel directly took part in the recruitments’. Kōno went on to offer the Japanese government’s apology for the terrible suffering caused, and promised that Japan would ‘face squarely the historical facts as described above instead of evading them, and take them to heart as lessons of history’.
Any effort to retreat from this statement would not only greatly aggravate friction between Japan and South Korea, to whom the statement was primarily directed, but would also cause anger in many other countries of the region.
During a debate in the Japanese Diet on 20 February, Suga stated that a re-investigation of the Kōno Declaration was needed ‘from an academic perspective’. Few people (least of all historians) would object to further careful study of the history of the ‘comfort women’. But the background to Suga’s statement raises very large questions about the ‘academic’ nature of the proposed review.
The Kōno Declaration has long been a bête noire of the Japanese right, who believe that it besmirches the honour of the wartime Japanese military. In 2007, during Prime Minister Shinzō Abe’s first term in office, his cabinet issued a ‘decision’ suggesting that there had been no direct forcible recruitment of ‘comfort women’ by the Japanese military themselves. The proposed review appears to be a further extension of this approach.
But the current Abe government’s determination to pursue the issue at this sensitive moment is puzzling.
One explanation may be that, by stirring nationalist sentiment, the government is preparing the ground for a further push towards military expansion and constitutional revision. Another could be the desire for public distractions as Japan moves towards an unpopular consumption tax hike, scheduled for 1 April.
The rhetoric of the 20 February Diet debate suggests that the review will focus particularly on the testimony of 16 South Korean former ‘comfort women’ who were interviewed as part of the Japanese government’s research that preceded the drafting of the Kōno Declaration. But a ‘review’ that took this approach would be meaningless. Persuasive evidence of forced recruitment by the military comes not just from these 16 women but also from archival records and the testimony of women in many countries, including South Korea, China, the Philippines, Indonesia and Vietnam. In Australia, Jan Ruff-O’Herne, who as a young woman was forced into a ‘comfort station’ in the Dutch East Indies where she suffered terrible physical abuse, has commented that it is ‘just hideous to not acknowledge it, there are so many witnesses who have spoken out about this’.
In many cases, the evidence shows that women were tricked into serving in ‘comfort stations’ by brokers who offered them work in restaurants or factories. Since these brokers were working on behalf of the military, it is, as former Japanese Prime Minister Tomiichi Murayama says, ‘meaningless to try to parse whether the military had forced the women into prostitution’.
The fear is that the proposed ‘review’, far from being a balanced academic assessment of the evidence, will follow the classic techniques of historical denialism — cherry-picking tiny fragments of convenient evidence, and using personal attacks to discredit eye-witnesses or scholars whose statements are inconvenient.
Japan’s friends and allies should be deeply concerned about this. Anything other than a sincere and historically responsible approach to the issue can only do harm to Japan’s international relations and credibility; and that would be particularly sad because Japanese civil society groups have been at the forefront of the fight for justice for the ‘comfort women’.
Violence against women in war is one of the great human rights issues of our day, and the ‘comfort women’ issue is a matter of global human rights. Like the terrible problems of child sexual abuse that haunt many of our religious institutions, it is a difficult issue to address. But, as in the case of child sexual abuse, denial only makes the wounds fester and corrupts the culture of the deniers. The Japanese government should face the past — because only by doing so can they contribute to making a better future for their country, the region and the world.
Tessa Morris-Suzuki is an ARC Laureate Fellow based at the School of Culture, History and Language, at the College of Asia and the Pacific, The Australian National University.
Author: Claude Barfield, AEI
Trade policy stands at the intersection of a nation’s diplomatic and security strategies and its broad economic goals. Though not necessarily in conflict, security imperatives and economic realities exist in two very different universes, inhabited by very different constituencies and interest groups. The recent history of America’s free-trade agreements with Korea and Colombia are telling examples of the uneasy juxtaposition of diplomatic priorities with domestic economic interests. In both cases, there were strong regional diplomatic and security reasons to buttress an important ally in a dangerous territory; yet in both cases, US domestic conflicts delayed the advancement of US national interests for some years. Diplomacy and security goals, thus, often must bow to former House Speaker Tip O’Neill’s wise observation that ‘all politics is local’.
Though the successful ratification of FTAs with Korea and Colombia are examples of important breakthroughs, the drive to conclude and execute the Trans-Pacific Partnership (TPP) with 12 nations of the Asia Pacific represents a struggle with vastly greater strategic implications for the United States — and it vividly highlights the difficulties of melding the competing diplomatic/security and domestic economic political universes. The difficulty is compounded by the deep divisions in the Democratic Party over trade policy and globalisation.
President Obama, after having trashed past US trade agreements during his 2008 campaign, belatedly endorsed the TPP negotiations at the end of 2009. The reversal was part and parcel of the much-hyped Obama administration ‘pivot’ to Asia. There has certainly been a military and strategic element to the pivot: the stationing of a revolving unit of 2400 Marines in Darwin and decision to shift 60 per cent of US naval forces to the Pacific were important elements of the administration’s ‘forward-deployed diplomacy’. And all this has been played out against the background of increased Chinese belligerence and bullying over conflicts in the East and South China seas, combined with the highly erratic and dangerous behaviour of the new North Korean regime under Kim Jong-un.
Symbolically, however, it is the TPP negotiations and the drive to conclude these negotiations expeditiously that stands as the focal point of the pivot. A successful TPP and the resulting benefits to US businesses and workers will form the economic anchor to persuade Congress and the public that Asia’s security and economic well-being is inextricably linked to US security and prosperity. There are now 12 Asia Pacific nations negotiating the TPP, with another, South Korea, standing in the wings. The membership (adding South Korea) represents over 40 per cent of world GDP and more than a third of total world trade.
Substantively, the TPP aims to create a ‘gold standard’ agreement: meaning that it will set the standard for a 21st century trade regime, including rules for services and investment, intellectual property, health and safety, state-owned enterprises, regulatory transparency and due process, labour and the environment. The key tradeoffs will include balancing the 21st century demands of the US and others against the more traditional 20th century priorities of developing TPP nations in areas like textiles, clothes, shoes, sugar, cotton and dairy products.
The TPP has reached endgame negotiations, where all twelve nations are expected to finally put their bottom line positions on the table. And it is here at this crucial juncture that US domestic politics have crashed the party with as yet incalculable consequences. In his State of the Union address, President Obama called upon Congress to give him so-called trade-promotion authority (expedited rules for Congress to ratify FTAs) in order to conclude the TPP and move forward on parallel negotiations with Europe. Within 24 hours of Obama’s plea, the Democratic majority leader Harry Reid defied the president by signalling opposition to granting trade-promotion authority and warning the administration not to send up such a bill. In the ‘all politics is local’ tradition, Reid’s eye is focused narrowly on holding the Senate in the midterm elections and retaining key support from union and environmental groups who strongly oppose the TPP.
This leaves the ball squarely in Obama’s court: he must quickly decide whether to tackle Reid head on and mobilise other Democratic senators against their own majority leader — or attempt to get an ironclad agreement from Reid to allow a vote on TPP in a lame duck session after the election. He must also forge an alliance with congressional Republicans who — whatever Reid decides — will provide the majority of votes for TPP in both houses of Congress. Other TPP nations will be closely monitoring the administration’s decisions and Congress’ in coming weeks — as a guide to their own negotiating positions.
The outcome of this debate and political battle will have far-reaching consequences. The failure of the US to continue to lead in a successful conclusion of the TPP would likely destroy the possibility of a broader US-led and anchored Trans-Pacific regional economic structure. In its place, the Chinese are already assiduously pushing for a narrower East Asian architecture that does not include the US. And well beyond the economic consequences, future US diplomatic and security leadership and alliances in Asia will be severely jeopardised as US regional allies come to doubt its ability to overcome local forces in order to pursue vital national interests.
Claude Barfield is a resident scholar at the American Enterprise Institute for Public Policy Research.
A version of this article was first published here in The National Interest.
Author: Dionisius Narjoko, ERIA
As the biggest country in Southeast Asia, Indonesia is a natural leader of ASEAN. For decades since the association was established in 1967, Indonesia has played an important role maintaining geopolitical stability in the region. This leadership has recently become more demanding due to border disputes within ASEAN and China’s territorial claims in the South China Sea.
Indonesia also assumes leadership on ASEAN economic matters, albeit, some would argue, not sufficiently actively. Still, at the Bali Summit in 2003, Indonesia was bold enough to introduce the establishment of an ASEAN Economic Community (AEC) by 2020 (later accelerated to 2015) as the central ASEAN objective and, more recently, during the Bali Summit in 2011, putting in place the Regional Economic Comprehensive Economic Partnership (RCEP) by 2015.
But progress toward establishing the AEC has been modest. While there have been some notable achievements, critical targets for laying a robust foundation of a fully integrated and equitable ASEAN are yet to be achieved. With 2015 now just the year after next, time is running out, and the need to address the challenges and obstacles to realising the AEC was acknowledged by ASEAN leaders at their 2012 Phnom Penh meeting.
The RCEP is a new regional trade agreement built upon the ASEAN-centered free-trade agreements (FTAs) involving, all six ASEAN dialogue partners (Japan, China, South Korea, Australia, New Zealand and India). Because of its structure, RCEP is perceived as a new trade bloc that consolidates all of ASEAN’s ‘plus-one’ FTAs, with the objective of creating a broader and deeper engagement with significant improvement over the existing FTAs. This means harmonising the trade and regulatory rules between ASEAN members and their FTA partners and minimising trade-diverting effects.
It is important for ASEAN to make convincing progress in RCEP negotiations, set conveniently to conclude and coincide with the commencement of the AEC in 2015. ASEAN has now arrived at a critical juncture where the AEC’s credibility will require ASEAN to choose the path of bold action to improve the rules governing ASEAN FTAs. This is deeply linked with RCEP’s goals, and while it is not necessary for ASEAN to first complete all of its AEC Blueprint measures to conclude the RCEP, meaningful progress, in at least some of the more difficult areas, like services liberalisation, is important. This is critical for ASEAN if it is to reach the required ASEAN common position vis-à-vis the dialogue partners for RCEP negotiations.
Moreover, deeper intra-ASEAN integration is a prerequisite for a broader East Asian integration led by ASEAN. ASEAN functions as a ‘hub’ with linkages or spokes to countries (the dialogue partners); at the same time, the hub serves as a platform for networks of production involving all countries connected through the hub (or ASEAN).
In short, now is the time for ASEAN to really focus on its economic integration agenda, and Indonesia — as the most influential country in ASEAN — should take a leading role in this.
Given the impending 2015 deadline, Indonesia should focus on issues that are difficult to solve but critical for AEC’s realisation. As a number of studies have suggested, non-tariff measures and services liberalisation stand out.
ASEAN has been successful in tariff elimination but not so in reducing barriers stemming from non-tariff measures. Significant non-tariff barriers applied by ASEAN member states can negate the positive impact of tariff elimination. And dealing with non-tariff measures is even more important, given that some of them can be used for short-term protectionist purposes, especially during downturns.
Services liberalisation, meanwhile, is critical — especially for services needed as inputs for production such as logistics, transport and business services. Probably the biggest challenge for ASEAN in services liberalisation (pursuant to the ASEAN Framework Agreement on Services) is how ASEAN member states can arrive at substantially more open commitments for foreign commercial presence in domestic economy. On this, a more open investment regime is necessary to create incentives for firms to invest across ASEAN countries.
But there are obstacles to Indonesian leadership in ASEAN too. For one, Indonesia faces a number of domestic economic challenges. Issues in infrastructure development, a high dependence on natural resources for generating income, a more rigid labor market, and continuing development gaps between regions within Indonesia are just some of the key concerns. All these are known to have eroded the country’s overall competitiveness in the past decade or so, especially in comparison with other ASEAN countries. These challenges also indicate that the country’s economic structure is (or will be) changing, and will likely still be doing so for many years to come, continuing the process started in the early 2000s.
The best way forward would be for Indonesia to engage both challenges — domestic economic reform and reform of ASEAN leadership — together. Commitment to achieving AEC and RCEP by 2015 will have the effect of instilling discipline at home for implementing the necessary domestic reforms. Even if the 2015 deadlines are not met, a decisive resolution to Indonesia’s domestic issues will benefit the country’s competitiveness, regardless of whether the region is fully integrated. At the same time, improvements to competitiveness will create momentum for increasingly bringing Indonesia into a more integrated region.
Dionisius Narjoko is a researcher at the Economic Research Institute for ASEAN and East Asia.
Author: Peter Drysdale, Editor, East Asia Forum
There has been a tad elevation in the excitement of the political-security community about drawing lines in the sand around China’s rise and the interests of the United States and its allies in recent months, with more than a hint that a new Cold War is emerging in East Asia along the lines of that in earlier times between the old Soviet Union and the Western bloc.
Perhaps this is more noticeable in some countries than others: in Australia, where a new government has been totally wrong-footed in its management of external relations through complicity with a security apparatus that a growing number of reasonable people are beginning to think is not subject to effective political control; in Japan, where the extreme right has been let off the leash; and in the Philippines, where there is political advantage in local nationalism over the rocks issue.
Significantly, though this current in American thinking about how to deal with the world is always swirling around under the surface, it is not currently a significant factor in mainstream or Obama administration thinking. The newly instigated US-China leadership dialogue is a powerful symbol of quite the opposite stream in both US and Chinese thinking. As can be seen in this pattern of developments, the challenge for the United States is to limit the impact of the excitable fringe in its management of its core bilateral relationship with China.
The fact is that the world in which the rise of China is taking place and the world in which the Cold War broke out are very different worlds. The United States and China are both locked into a global economic and political system that is characterised by deep interdependence. Economic interdependence between the Soviet Union and the United States through most of the Cold War was close to zilch.
China is committed to the same international rules and norms in the international trading system as the United States. The global economic and political regime was fundamentally bifurcated during the Cold War, and the development of common rules and norms did not extend beyond the so-called ‘free world’. These differences are profound. However incomplete and imperfect, today’s global economic-political system constrains the way in which its largest and most important adherents relate to each other if they behave rationally in their own self interests.
Well, one might object, economic interdependence before the Great War in Europe, on the outbreak of which much is being written in this anniversary year, was also high — but did it constrain war between the pretender of the day, Germany, and the established power, Great Britain? Economic interdependence and the international system in 1914 were entirely different from what has been constructed post-World War II. Also, of course, humans are prone to behave irrationally from time to time. But rarely will such behaviour be calculated or allowed to bring the highly valued system down.
In most of the US-aligned political-security community — with the important exception of that in the United States itself — understanding of these new interdependencies is neither part of the framework of strategic analysis nor widely understood. How else can one understand what passes for strategic analysis of the impact of Chinese economic power? One view is that this mindset has taken over foreign policy thinking in Australia, for example, in recent times, but there is some evidence of more nuance in the policy community there. The US Pentagon and strategic studies community more broadly suffer far less in the way of these limitations in the framework of their analysis, routinely drawing in economic, cultural, astro-physics, military, and a whole range of other talent into security scenario building and assessments.
In a timely review of this issue, Stephan Frühling’s lead essay this week asks: ‘Is the Cold War really a useful paradigm for the tensions caused by China’s rise — and if so, what are its most relevant lessons for East Asia today’? His answer is a resounding ‘no’.
‘Despite superficial parallels between today’s China and the Soviet Union … it is difficult to see that current differences between China and the Philippines, or China and Japan, amount to a similar threat to the existence of the “free world” itself. This is not to belittle the challenge that China’s view of international affairs poses to the system of international law and the principle of (legal) equality of states on which the current international system is based. But China’s aspirations are not to sweep away the domestic political systems of the US and its allies, nor are they expansionist in the way that the Soviet Union subjugated Eastern Europe, or sought to do in Afghanistan or Angola. China and the West are not isolated from each other in the way the Soviet Union was, and today’s conflict is about status, not ideology. Increasing firmness and resolve in meeting Chinese provocations may well be necessary to manage regional tensions, but even more forceful proposals for pushing back against China are still a far cry from the economic, political and military necessities that fighting the Cold War imposed on the US and its allies. There is a danger that evoking the image of the implacable Cold War struggle with the Soviet Union may well become a self-fulfilling prophecy’.
That puts it as clearly as it can be put, for the moment. But this perspective also raises big questions about strategic thinking and policy making in our region, presently and most particularly in Australia and Japan.
Peter Drysdale is Editor of the East Asia Forum.
Author: Stephan Frühling, ANU
In recent months, it has become fashionable to describe the emerging strategic rivalry between China and the US and its allies as a new Cold War — even rival trade negotiations are likened to an ‘economic Cold War’. And yet, there have been other great power conflicts and rivalries before. Is the Cold War really a useful paradigm for the tensions caused by China’s rise — and if so, what are its most relevant lessons for East Asia today?
The Cold War comprised the second half of Europe’s ‘short’ 20th century, which lasted from 1914 to 1989. The First World War and Russian Revolution destroyed Europe’s old order, and gave rise to an age of totalitarianism. Soviet policy after the defeat of Nazi Germany drew on old Russian fears and traditions but the communist ideology that it espoused was global in ambition and attraction. Resisting further communist expansion was important for the West because there was no ideological and, or so it seemed at times, practical limit to it. The strategy of ‘containment’ sought to build countervailing military and economic centres on the Soviet periphery, to isolate communism politically, economically and militarily, and ultimately — in the words of ‘NSC 68’ (the 1950 National Security Council report to the US president) — to ‘foster the seeds of destruction within the Soviet system’.
Despite superficial parallels between today’s China and the Soviet Union (not least a peculiar interest in white-wall tyres) it is difficult to see that current differences between China and the Philippines, or China and Japan, amount to a similar threat to the existence of the ‘free world’ itself. This is not to belittle the challenge that China’s view of international affairs poses to the system of international law and the principle of (legal) equality of states on which the current international system is based. But China’s aspirations are not to sweep away the domestic political systems of the US and its allies, nor are they expansionist in the way that the Soviet Union subjugated Eastern Europe, or sought to do in Afghanistan or Angola. China and the West are not isolated from each other in the way the Soviet Union was, and today’s conflict is about status, not ideology.
Increasing firmness and resolve in meeting Chinese provocations may well be necessary to manage regional tensions, but even more forceful proposals for pushing back against China are still a far cry from the economic, political and military necessities that fighting the Cold War imposed on the US and its allies. There is a danger that evoking the image of the implacable Cold War struggle with the Soviet Union may well become a self-fulfilling prophecy.
And yet, there is one important aspect that East Asia today does share with the Cold War (and earlier times): the fact that war between the great powers is becoming thinkable again. (Re)Learning to live in the shadow of a possible third World War means that the geostrategic holiday of the post-Cold War era is well and truly over for the countries of East Asia. Managing rapid military-technological competition is not something the US or its allies do very well any more. It has been a while since escalation paths, crisis stability or theatre and strategic balance were the subject of presidential campaigns and household debates. And without a serious threat, the US and its allies were spared the difficult choices about the risk and loss of sovereignty that participation in an integrated alliance system entails.
Overall, the Cold War example is thus more useful as a reminder of how difficult managing great power conflict in Asia will be than for any insights about the particular challenge posed by China. China is fundamentally different from the Soviet Union, and so will have to be US and allied strategies to deal with it. On the positive side, this means that a new Cold War is not inevitable, or even likely. On the negative side, however, the Cold War was also a historic success, because great power rivalry did not result in major power war. Ensuring that the same is true this time again will be difficult enough, even without misleading historical analogies.
Stephan Frühling is Senior Lecturer in the Strategic and Defence Studies Centre at the ANU College of Asia and the Pacific.
Author: Rafaelita M. Aldaba, PIDS
A resurgence of the Philippines’ manufacturing industry, driven predominantly by the expansion of domestic investment, puts the industry on the cusp of transformation, into a major driver of growth. Since the first quarter of 2013, manufacturing in the Philippines has continued to post growth rates above 10 per cent, hitting 12.3 per cent for 2013 compared to 5.5 per cent in 2012.
The leading manufacturing subsectors are chemical and chemical products; basic metal industries, furniture and fixtures; radio, television and communication equipment; non-metallic products; and footwear and leather products. Investment in capital formation for durable equipment continued to accelerate from 8 per cent in 2012 to 14.4 per cent in 2013.
The Philippines’ Department of Trade and Industry has been actively coordinating with industry associations for the formulation of industry roadmaps since 2012. This has led to a new industrial policy aimed at reviving the manufacturing industry. The government recently allocated US$1.5 million to a new program dubbed the Manufacturing Resurgence Program, which aims to support the implementation of the Philippine Manufacturing Industry Roadmap. A large part of the program is the establishment of an Industry Development Council composed of representatives from various government agencies and private sector groups. The Council will monitor the Roadmap’s implementation and recommend policies and programs to address binding constraints to manufacturing growth and development.
This is crucial for two reasons. First, it will enable the Philippines to take advantage of opportunities and negotiate challenges arising out of the ASEAN Economic Community (AEC). Second, and more importantly, it will ensure the creation of quality jobs and the attainment of sustainable and inclusive growth as reflected in the country’s Updated Development Plan.
The experiences of the last two decades have shown that the Philippines cannot leapfrog industrialisation and rely on the service sector alone to achieve sustainable and inclusive growth. A large and competitive manufacturing sector is required. Manufacturing provides opportunities for high-skilled, semi-skilled and low-skilled workers, and can thus support the development of a nation’s human capital. The transformation of the sector currently underway in the Philippines should also support the movement of workers from the informal to the formal sector as well as from low value-added to high value-added activities where wages and compensation are greater.
At the heart of the Philippine Manufacturing Industry Roadmap for Structural Transformation is the development of the automotive industry through its integration into the production and sales systems of global automakers. A car has over 30,000 parts and its construction is dependent on metal, chemical, plastic, textile, rubber, glass, steel, electrical and other manufacturing subsectors. As a consequence, through inter-industry and supply-chain linkages, auto manufacturing can have a large multiplier effect in an economy because any expansion in the automotive industry drives growth in feeder industries. While the Philippines’ domestic production of automobiles is currently limited, there are clear opportunities to increase production as the country’s middle class grows and AEC integration creates an open market of over six million people. The third wave of ASEAN motorisation is also expected to reach the Philippines by 2016.
The goal of the New Auto Program is to attract foreign direct investment (FDI) in assembly and component manufacturing to enable the Philippines to deepen its participation in the global value chains of multinational companies. Global value chains are a new form of industrial organisation where different stages in the construction of a finished good are located in different geographical areas in order to minimise production costs. Suppliers of components usually follow where assemblers locate their operations. This has been the experience of several emerging market economies including China, Brazil and Thailand, where massive inflows of FDI into assembly attracted many new component companies that followed their major customers.
To ensure the Philippines can achieve similar results, a comprehensive mix of policies will be crafted to stimulate demand and effectively regulate the industry. If it inspires new investments in the automotive industry, the New Auto Policy could not only catalyse growth within the industry but also drive broad-based manufacturing growth and economic transformation across the Philippines.
The Manufacturing Industry Roadmap will coordinate measures to address the most binding constraints that prevent the entry of firms into the Filipino manufacturing sector and hinder their integration into global value chains. The goal is to help markets work better by developing an investment strategy, optimising supply-chain integration, improving regulation, making education more industry appropriate, and encouraging industrial clustering to achieve agglomeration effects and reduce transaction costs.
The present administration’s effective implementation of the Manufacturing Roadmap is crucial and timely given the success of governance reforms that have led to the economy’s recent strong performance and the growing interest of investors, who are now seriously looking at the Philippines as a good place to do business.
Rafaelita M. Aldaba is Senior Research Fellow at the Philippine Institute for Development Studies.
Author: Deepanshu Mohan, O.P. Jindal Global University
In a recent interview, the Governor of the Reserve Bank of India (RBI), Raghuram Rajan, stressed the need to pay more attention to one of the most underestimated issues currently facing the Indian economy: the country’s poor performance in the ease of doing business. It is undeniable that Indian policymakers and legislators have neglected this issue for too long, leading to a downgrading of India’s business and investor environment.
India has now slipped three places down to 134 in the World Bank’s 2014 Ease of Doing Business rankings (Singapore is ranked first). Within the South Asian region, India is ranked the third lowest, just above Bhutan and Afghanistan.
So what exactly is responsible for India’s woeful performance in these rankings? Why is it so hard to start a business in India when in many respects it resembles China — ranked 16 — with its large domestic market, high-consumption as a % of GDP and cheap labour market? These are questions that the upcoming government should endeavour to answer.
For a developing country like India, it is of critical importance to ensure a favourable business environment, especially for those who are looking to reap the benefits of its domestic market potential and the upward trend in consumption expenditure. There is a need for more domestic investment in the Indian economy to boost growth, and this can be encouraged by making it easy for start-ups to do business in India. The State’s failure to do this has seen the country become too dependent on foreign investment (through foreign direct investment and foreign institutional investors) to address the growing investment deficit. Simply attracting more foreign direct investment to an economy already suffering from policy paralysis will not change much.
The deterioration in India’s performance on various individual metrics related to the ease of doing business raises many questions about the quality of the current Indian legislature. Given that the Congress government has been in power for almost 10 years, it is a damning indictment that no concrete measures have been taken to reduce unwarranted delays in starting a business, dealing with construction permits, registering property and protecting investors.
The only metric upon which India seems to have improved between 2005 and 2013 is access to credit, but this has been largely made possible due to the effectiveness of the RBI’s monetary policies after the global financial crisis and the troubles in the euro zone. The RBI has been able to provide banking and credit services to 90 per cent of unbanked regions in India over the past decade. Several legislative measures have been enacted in this area: the RBI-backed Banking Amendment Bill in 2011, for example, and the new Companies Bill in 2013, which introduced the concept of a ‘one person company’ into law. But these achievements are largely chimerical. Nothing concrete has been done by the state to reduce the more than 20 procedures and considerable time, often more than 35 days, required to start a business.
One of the steps that need to be taken is to make it possible to complete the paperwork for starting a new business online. Many have called for this in the past, but it has taken too long to be implemented across the board. The reason for this is simple: vested interests have prevented change. Lobbyists for middlemen have ensured that online application systems (for dealing with construction permits, getting electricity, property registration, and so on) are totally avoided. At the same time, there is a dearth of skilled government staff designated at various levels to ensure the speedy setting up of new businesses. The National Skill Development Corporation (NSDC) and similar institutions are yet to have a tangible impact in addressing this critical issue. A ‘how to do business’ manual prepared by each state government would be another step in this direction that could make things a lot easier for those interested in starting enterprises in various sectors within the same region.
It is easy to give speeches on promoting a unified vision of inclusive growth for the country to succeed, or include it in party manifestos, but what eventually matters is the implementation of effective, prompt action to achieve this vision. Unfortunately, the idea of India as an emerging land of opportunities for entrepreneurs to start up and do business will wither unless the state can step up and take concrete measures to remedy the situation.
Deepanshu Mohan is a Senior Research Associate at the Jindal School of International Affairs, O.P. Jindal Global University.
Authors: Hyung Min Kim, Xianjiaotong-Liverpool University, and Kyoung Seok Jang, NARS
South Korea experienced rapid urbanisation after the Korean War when a high number of rural peasants left their hometowns for Seoul in search for better economic opportunities. Seoul played a pivotal role in the urbanisation process — its population was less than 2 million in the 1950s, but increased to more than 10 million in the 1990s. As Seoul grew, its surrounding provinces, Gyeonggi and Incheon, were integrated into a broad region now known as the Capital Region (CR). While the CR accounts for 11.8 per cent of South Korean territory, in 2012 it was home to 25.7 million residents (about half of the country’s population). Economic activity is also highly concentrated in the CR, accounting for 47.1 per cent of South Korea’s total firms in 2010.
In response to this mass migration and the CR’s rapid urbanisation, the South Korean government has enacted decentralisation policies and a nationwide growth management policy since 1982 in an attempt to minimise problems such as traffic congestion, environmental pollution and housing shortages, and to promote equitable development across the country.
Three key pieces of legislation were introduced in the CR to support the growth management plan: the Capital Region Readjustment Planning Act (CRRPA), the Industrial Sites and Development Act and the Industrial Cluster Development and Factory Establishment Act. Importantly, the CR’s Adjustment Committee — rather than provincial governments — had the authority to grant planning permits for land development, including residential development, industrial development and tourism development. A quota for the number of factories allowed to operate in the CR was also introduced, so that the establishment and expansion of factories were strictly controlled. Additionally, new universities could not be established and existing universities could not be expanded in the CR, the construction of public office buildings was controlled, and an ‘over-crowding charge’ was imposed on businesses that caused congestion in the CR, including the owners of retail outlets and office facilities.
This growth management policy has been the source of political debate for many years. While all three provincial governments in the CR oppose the strict regulations, the thirteen provincial governments outside the CR are in support of stricter regulations and disagree with the relaxation of such measures. Of course, businesses demand deregulation as the current policies prohibit them from extending their operations in the CR. They claim that the regulations are ineffective to achieve equitable development across the country. Rather, the regulations stimulate outflows of industrial activity overseas where cheap labour and land can be guaranteed, decreasing South Korea’s global competitiveness. In fact, new IT-related production lines have recently been created — while others have been relocated — in adjacent, low-cost countries like China. The debate surrounding the CRRPA lies between two extreme ideas: nationwide and equitable regional development versus the efficacy of these policies for further economic growth. Thus, policies on urban development have varied depending on the attitude of the ruling party.
Former President Roh Moo-hyun adopted a radical development policy to reduce the gap between the CR and non-CR regions. In 2003–08, his government made a thorough plan to relocate public offices, including 13 ministries and 154 public agencies and public institutions, outside the CR. A new administration-oriented town was constructed and public offices started relocating to this town in 2013. Also, public agencies were to be relocated to ten cities in non-CR regions with support from the government. Although presidents changed, these plans continue.
When the ruling party changed in 2008, then-President Lee Myung-bak employed a strategy to enhance the competitiveness of non-CRs rather than impose stricter regulations on the CR. During his term as president, regulations on industrial location were partially relaxed and quotas for factories were increased. In Seoul, small industrial parks were allowed for advanced technological industries such as cultural production and IT. The current Park Geun-hye government has, for now, continued on with the Lee government’s direction.
The CR is a fundamental part of the South Korean economy, and a wide range of stakeholders are involved in its growth management policy. In order to create an environment that is attractive to businesses and global investors, the current regulations must be reformed. But at the same time, the interests of non-CRs need to be emphasised if South Korea wants to achieve balanced, nationwide growth. The Park Geun-hye government now faces a dilemma that has persisted for more than three decades. A rapid revamp of urbanisation policy and the national economy, therefore, seems unlikely without a powerful political commitment.
Hyung Min Kim is a lecturer at Xianjiaotong-Liverpool University, China.
Kyoung Seok Jang is a legislative researcher at the National Assembly Research Service, Seoul.
Author: Raghbendra Jha, ANU
India agreed to an interim ‘peace clause’ on its food subsidy policies at the ninth ministerial conference of the WTO held in Bali in December 2013. While the Indian media largely heralded this decision as a triumph for India’s food security policy, a closer inspection of what was actually agreed to shows that this optimism could be misplaced. The ‘peace clause’ bars WTO member states from raising disputes with India vis-à-vis its food subsidies in return for a legally binding agreement on trade facilitation, but expires in December 2017 with no guarantee of successful closure. And any subsequent agreement may put at risk India’s ability to regulate its minimum support prices for major crops.
The old Public Distribution Scheme (PDS) — which was repealed in 1992 — was a general entitlement scheme that sought to distribute food grains at affordable prices to all consumers without any specific target. Although the food subsidies the government committed to under the old PDS was large, its effects on the poor were minimal.
The PDS was originally used as a rationing device by the colonial government during World War II. Following widespread crop failures in the mid 1960s India needed to import grain — particularly wheat — from the US. However, it did not take long for India to look for ways to be self-sufficient in producing and holding key food supplies.
India’s desire to achieve food self-sufficiency was born of its necessity to import large quantities of wheat from the US and thereby being subjected to political pressures. India’s quest for food self-sufficiency led to a massive expansion of the PDS and the setting up of grain procurement through the Food Corporation of India and developing a nationwide distribution network.
The same impetus to not succumb to external pressures in the matter of its food security shaped India’s position at the WTO discussion in Bali, where India opposed a push by several countries to limit the size of its food subsidy.
However, the ‘victory’ at Bali is only a short-term reprieve and, independently of pressures at the WTO, India must modernise its food security system in order to make it more effective. In 1997 India decided to target its food subsidy program under the new Targeted Public Distribution System (TPDS). The TPDS was expected to deliver food subsidies more effectively to the poor and reduce the program’s fiscal burden on the government.
Although rapid economic growth has sharply lowered the poverty rate in India, malnutrition remains widespread with daily calorie intake declining between 1993–94 and 2009–10. So, in addition to being self-sufficient in producing and holding key food supplies, looking after the welfare of India’s poor is another strong incentive for maintaining food subsidies.
India’s food subsidies have risen sharply in the last few years because of open-ended grain purchases at high minimum support prices, large and costly stock holdings and a food distribution system riddled with inefficiencies and leakages. The government now buys a major share of the marketed grain and is now holding almost 80 million tonnes of grain — more than twice the strategic buffer stock needed. India’s new National Food Security Act, also known as the Right to Food (RTF) Act, will expand the scope and coverage of the TPDS. The government estimates that the RTF will increase India’s annual spending on food subsidies from US$4 billion to approximately US$20 billion.
The Planning Commission reports that 58 per cent of subsidised food grain does not reach Indian families living below the poverty line because of identification errors, non-transparent operations and unethical practices in the implementation of the TDPS. Add to it the high cost of handling food grains, the government spent Rs 8.5 to transfer one rupee to the poor in 2007–08. Thus, the economic costs of providing grains through the TPDS are high — most Fair Price Shops (FPS) are unable to break even with the current structure of TPDS prices.
In 2017 India can successfully defend its food subsidy program only if it can convincingly demonstrate that the TPDS is significantly reducing the incidents of malnutrition in India. To the extent that real income transfers do take place this is actually true for the TPDS.
So far as policy options go universal TPDS can be ruled out because of inadequate subsidies to the poor and issues with targeting. The RTF will place even more pressure on India’s fiscal deficit and disrupt grain markets. India needs to consider two policy options.
First, it is important to increase the margins for FPS dealers. In 2007–08 the shopkeepers received a small margin of 7 paise per kilogram of wheat sold to every household living below the poverty line, as compared with a margin of Rs 1.97 for selling this amount in the open market.
Second, the TPDS performance varies considerably across states. Most southern states consistently do well in this regard; Chatitisgarh and some others improved their performance; and some northern and eastern states lagged behind. Governments that are effectively implementing the TPDS need to communicate with those lagging behind in order to consistency implement the TPDS across India.
These policy changes need to happen immediately since the window of opportunity to get the policy settings right before the ‘peace clause’ expires in 2017 is small.
Raghbendra Jha is Professor of Economics and Executive Director at the Australia South Asia Research Centre, The Australian National University.
Author: Tu Phuong Nguyen, University of Adelaide
New social forces emerging from market reforms are penetrating the formal agenda of Vietnam’s one-party regime. In particular, beyond the corporatist state structure, private entrepreneurs have engaged more actively in organised business groups, and these groups are helping to voice the concerns of these entrepreneurs. The policy environment is more open, though still technocratic as entrenched alliances persist between the state and state enterprises. New governance practices have emerged within the state — enhancing the way policies are deliberated and implemented.
The private sector, mostly small and medium enterprises (SMEs), has developed under the Enterprise Law. Enacted in 2000, it is considered a policy milestone of Vietnam’s modernisation agenda. These enterprises have contributed almost 40 per cent to national GDP and become vital to creating jobs, addressing poverty and diversifying the economy. They are the most dynamic and vulnerable within the private sector when the Vietnamese economy is trailing on a rocky road.
So, the Vietnamese government has introduced a range of legislation to shore up the private sector’s economic success — growing from a surge in foreign funds, technical assistance and investment. Decree 56/2009/ND-CP, on supporting the development of SMEs, defined the status of SMEs for the first time. It outlined and relegated support programs to a range of state and non-state agencies.
There are political connections among emerging private businesses at the local level — though less so in foreign companies — and the issue at stake is the nature of interactive mechanisms between the state and private business, either formally through institutional means or informally through personalised networks. Business associations now act as intermediaries. They represent small and medium business beyond the state corporatist structures in Vietnam. Such representation reinforces a new dialogue between the state and non-state business sector.
The Vietnam Association of Small and Medium Enterprises (VINASME) was founded in 2005 on a voluntary basis to represent SMEs nationwide. It is linked to the Ministry of Planning and Investment but business members elect the officials who direct it — they are not sanctioned by state institutions. The main functions of VINASME are to encourage business members’ mutual support and communicate their opinions to the state departments, while keeping members informed of government policies, and participating in policy consultations in support of SMEs.
The association frequently organises joint conferences, forums and dialogues with participation from state and business representatives and foreign counterparts. Common issues being discussed include access to loans and credit, customs and taxation, the need for human resource training and the responsiveness of government policies in supporting business. VINASME has also formulated new programs in technological innovation and actively encouraged coordination within the SMEs sectors to boost economic and social sustainability.
Institutional openness extended to associations from outside corporatist structures is giving way to constructive policy debates that potentially enhances their deliberative influence. VINASME drafted 11 documents, between March 2012 and April 2013, evaluating and proposing changes to decisions and policy drafts of relegated national ministries — responding to ministerial calls for policy evaluations. VINASME has also developed contractual partnerships with financial institutions and external organisations in order to boost its efficiency and reputation.
This follows the Ministry of Trade and Industry, in liaison with VINASME, implementing the Operational Cooperative Program to facilitate the support of SMEs in 2008. In 2011, a program of inter-sectoral legal assistance, joined by business associations, the Ministry of Justice and local ministerial agencies, came into place to enhance business competitiveness and help resolve legal disputes.
It is worth stressing that VINASME’s recognition of SMEs as its core beneficiaries — which could hardly be seen in state corporatist organisations — signals an important step to push these sectoral interests onto the formal agenda and channel resources into assisting their business activities. Still, business associations account to both business members and the government. This is more in attempts to address functional issues related to governing than in the creation of new mechanisms for democratic voices from the private sector.
In other words, their representation is one that improves the existing pattern of decision making — without bolstering the level of participation in the deliberation and implementation process. For example, following VINASME’s suggestions to revise the governmental scheme for a SMEs credit guarantee fund in 2013, amendments were made to provide clearer designation of the rights and responsibilities of SMEs as the guaranteed, and the fund managers as the guarantors. Yet a vital proposal to list VINASME as one of the key stakeholders responsible for policy execution and progress was not included in the latest decision.
Though claiming to be autonomous, embedding new intermediary channels in the state apparatus is essential in practice. Still, these channels have allowed for more state–business interaction that belongs to a new space of governance in Vietnam, as the state is adapting to and incorporating private interests.
Tu Phuong Nguyen is a Research Scholar at the Indo-Pacific Governance Research Centre, University of Adelaide.
Author: Rajiv Kumar, CPR
The Reserve Bank of India (RBI) took the market by surprise by raising the repo rate (the rate at which the central bank lends money to commercial banks in the event of a shortfall of funds) on 28 January by 0.25 per cent to 8 per cent.
But to those who have followed the recommendations of the Urjit Patel Committee (UPC), the measure will be seen as consistent with the RBI’s declared target of bringing headline CPI inflation to below 8 per cent. With this move, the RBI has tried to move ahead of the curve of inflationary expectations, in line with its new official policy of inflation targeting.
Raising the interest rate is an attempt to signal to all relevant economic agents and those who set wages and the price of goods and services that the RBI will not relent until it has inflation under control. The RBI wants to emphasise that it sees high inflation as anti-growth.
The RBI should be commended for staying the course that it has laid down for itself. But it must be asked whether the RBI (and UPC) is correct in its understanding of the Indian economy and the effects of its monetary policy on rather complex on-the-ground realities.
To get an idea of these complexities, one could start by noting that headline CPI inflation has remained above 9 per cent for the last 60 months with core retail inflation remaining above 8 per cent during this period. Remembering that GDP growth during the earlier 2003–09 period averaged more than 7.5 per cent when inflation was high, it could thus be argued that persistent high inflation can co-exist with both high and low rates of economic growth in India. Adding another dimension to this complexity is the fact that despite the RBI raising the repo rate on four occasions in 2013 and GDP growth slowing down appreciably, inflation, especially retail inflation, remains stubbornly high.
It could be argued that the persistence of high inflation despite the growth slowdown reflects overcapacity in the Indian economy that is not shrinking despite some recent declines in demand. This can only happen if the supply-side or, more specifically, the growth rate of potential output, is also declining. This is a serious and worrisome conclusion because it implies that, in the last five years, government policies, or lack thereof, have actually diminished India’s supply side capabilities.
This could be the result of, among other things, driving down private investment; raising the incremental capital output ratio by locking up capital in unproductive or non-functioning projects; or driving down labour productivity by not generating higher output from the existing labour stock whose nominal wages rise in line with inflation. A key question now is whether the rise in interest rates, by raising the cost of capital and demonstrating an anti-growth bias, could exacerbate the decline in the growth rate of potential output. This would be reflected in investors choosing to invest abroad to avoid policy uncertainties and escape the high cost of capital.
There is also a broader issue about the RBI becoming an ‘inflation targeter’ in an economy in which large parts of the economy are characterised by price rigidities and mark-up pricing. In India, intermediate sectors that have direct impacts on downstream costs and prices such as coal, diesel and electricity are fixed and controlled by government fiat. Similarly, a large number of agriculture prices that cover nearly 30 per cent of agro output including all major cereals and sugarcane are administratively fixed. These prices will not be affected by a softening of demand. Instead, rise in capital costs enters the price fixing formulae and results in a ratcheting up of these prices irrespective of the demand–supply balance. Raising interest rates could, in these conditions, have a perverse outcome.
All these things considered, it is clear that by persisting with its anti-inflation stance, the RBI is signalling sharply that policy measures are urgently needed to improve supply-side capabilities to raise the growth rate of potential output. These include the oft mentioned measures of removing structural impediments to the inter-state movement of agriculture produce; eliminating monopoly control of critical intermediate sectors like coal; raising public investment in productivity enhancing schemes in agriculture; addressing the debilitating infrastructure deficit that makes it impossible for India’s small- and medium-sized enterprises to face import competition; improving governance, especially in the allocation of natural resources, while establishing a transparent and efficient regulatory framework; and reducing the revenue deficit, which inevitably raises the cost of credit and effectively pre-empts private investment.
These measures are 10 years overdue. This represents a huge missed opportunity to achieve sustained high GDP growth rates with a balanced macroeconomic structure. Contrary to what the Finance Ministry has stated, economic growth does not necessarily have to be cyclical or volatile. This has been amply and persistently demonstrated over the last three decades by China. But for India to mimic China it will have to be far more conversant with its own complex realities and not simply imitate paradigms borrowed from advanced economies. Monetary policy is constrained by its limited arsenal of policy instruments. It can hardly be expected to yield high growth, lower inflation and exchange rate stability at the same time. But it should also not be allowed to become dogmatic and lose much needed flexibility to effectively respond to issues that arise in as complex an economy as India’s with its price rigidities and discontinuous behaviour of critical parameters.
Rajiv Kumar is Senior Fellow at the Centre for Policy Research, New Delhi
This article originally appeared here, in India Today.
Author: Michael Clarke, Griffith University
The Chinese Communist Party (CCP) is taking an increasingly hard line on Xinjiang. But long-term Chinese policy itself is contributing to Xinjiang’s unrest.
On 15 January, authorities in Beijing arrested the outspoken critic of government policies in Xinjiang, Ilham Tohti. Tohti, an Uyghur scholar, has called into question the dominant government narratives on aggressive economic development for the Uyghur and the extent of Uyghur ‘terrorism’.
Just days after Tohti’s arrest the Xinjiang regional government announced that it would double the public security bureau’s ‘counter-terrorism’ budget for 2014 in an effort to prevent terrorist attacks and curb religious extremism.
But this is only the latest incident. Inter-ethnic violence in the regional capital, Urumqi, captured international headlines in July 2009. Since then, numerous incidents of violence have rocked the region — including anti-government protests, attacks on police stations and inter-ethnic clashes. Last year alone was punctuated by at least five such incidents in Kashgar and surrounding areas, as well as in Turpan and Khotan. The regional authorities have claimed that these incidents have been the handiwork of extremist and terrorist gangs bent on ‘jihad’ with links to hostile external forces. In their attempts to link unrest in Xinjiang with such forces the authorities have also made the expansive claim that up to 100 Uyghurs have travelled to Syria to ‘sharpen their terrorist skills’.
Although it may be difficult to either confirm or refute this claim, it is not difficult to pinpoint the three aspects of long-term Chinese policy that are contributing to unrest in Xinjiang.
The first is the state’s commitment to fully integrate Xinjiang and the Uyghur politically, economically and culturally with China. While this has been the overarching goal of state policy in the region since its ‘peaceful liberation’ by the PLA in 1949, it is one that has been embodied since the 1990s in ‘state-led mega-projects’ — such as massive oil and natural gas pipelines linking Xinjiang to Turkmenistan and Kazakhstan. While bringing economic development, these projects have also destroyed Uyghur communities (such as the destruction of much of the old city of Kashgar through the $500 million ‘Kashgar Dangerous House Reform’ program), displaced thousands, and brought an influx of Han migrants to the region.
Second, alongside this state-led modernisation strategy, the authorities have implemented yearly ‘strike hard’ campaigns. These are against ‘splittists’ and, since 9/11, ‘terrorists and extremists’. Before 2001 these campaigns led to accelerated trials of alleged ‘splittists’. But in the post-9/11 climate the actions that are now criminalised as ‘terrorist’ acts have been expanded and punitive measures increased. This approach continues with Xinjiang governor Nur Berki. When announcing the increase to the counter-terrorism budget, Berki stated that the government would ‘constantly strike hard against violent terrorism, showing no mercy, in accordance with the law, and maintaining a high-handed posture’.
This leads to the third major issue contributing to unrest: the state’s continued desire to monitor and control ethnic minorities’ cultural and religious expression. Since the 1990s the regional government has been especially vigilant with respect to what it terms ‘illegal religious activities’ — that is, all religious or cultural activities that take place outside of state-sanctioned parameters. Significantly, the government’s continued anti-religious campaigns played a role in stimulating some of last year’s unrest in Turpan. Characteristic of the state’s heavy-handed approach has been the ‘Project Beauty’ campaign that is aimed at discouraging mostly Uyghur women from wearing traditional headscarves or veils.
In the aftermath of the 2009 Urumqi events, long-serving Xinjiang Party Secretary Wang Lequan was removed by Beijing in favour of the reportedly reform-minded Zhang Chuxian. This raised hopes that Zhang’s lighter touch would moderate tensions in the region. But Zhang’s return to old strategies and political slogans — such as his 2011 call for the CCP to institute ‘flexible iron-fisted rule’ — quickly dispelled hopes.
The most noteworthy ‘innovation’ in Chinese policy toward Xinjiang and the Uyghur since 2009 concerns Ilham Tohti. His arrest signals that Xi Jinping is determined to take the ideological fight to those advocating greater autonomy for Xinjiang’s Uyghurs.
Three days after Tohti’s arrest the Global Times excoriated the scholar. In an editorial it described him as someone who had abused his position to advocate for greater autonomy for Xinjiang. Tohti’s questioning of government claims regarding the extent of ‘terrorist’ acts amounted to an attempt to ‘find a moral excuse for terrorists’. The editorial concluded that without ‘brains’ like Tohti behind the ‘terrorists’ they would be a clueless mob.
This reveals the motive behind Tohti’s arrest: his criticism of the CCP’s line on the Uyghur and Xinjiang are perceived by Beijing as providing moral and intellectual succour to disaffected Uyghurs in Xinjiang. But if the CCP does not address the fact that its policies in Xinjiang play a role in stimulating such disaffection, the region will be doomed to repeat its cycle of unrest and violence.
Michael Clarke is a senior research fellow at the Griffith Asia Institute, Griffith University.
Author: Sjamsu Rahardja, World Bank
Integrating with the global market place was once Indonesia’s offensive strategic choice to accelerate economic reform and development.
Indonesia has benefited significantly from opening up to trade and investment. It responded without hesitation to plummeting revenues from oil exports in the early 1980s with sweeping reforms to reduce tariffs, non-tariff barriers, red tape in customs clearance and procedures for obtaining business permits. These reforms spurred the expansion of light-manufacturing industries and helped the economy reach a steady rate of per capita real income growth of 5 per cent per annum until the Asian Financial Crisis in 1997.
Alongside domestic reforms, Indonesia was a champion of economic integration and openness on the international stage. In the 1990s, Indonesia led APEC’s Bogor Goals declaration and its leadership also helped create the ASEAN Free Trade Agreement in 1995. As a member of the G20 process, host for the 2011 ASEAN Summit and recent host of the 2013 APEC Summit, Indonesia has supported old and introduced new initiatives for economic cooperation, especially in regard to connectivity and infrastructure. Indonesia is also one of the main advocates of the Regional Comprehensive Economic Partnership agreement, one of the most ambitious trade liberalisation vehicles currently being negotiated in Asia.
Yet in Indonesia there seems to be growing caution towards greater economic integration. In recent years regulatory and incentives regimes have become more domestically oriented. Although Indonesia’s average import tariff is relatively low at around 7 per cent, many imports are subject to new administrative requirements like pre-customs inspections and various permits. Indonesia’s services sector has not become more open to foreign direct investment (FDI) since 2003, with several areas remaining restricted to foreign participation. Strict cabotage rules limiting the ability of foreign providers to service Indonesian domestic sea lanes, combined with restrictions on FDI in ports, warehousing, and freight forwarding, mean Indonesia’s logistics sector is less exposed to competition than its main regional competitors. And with the ASEAN Economic Community to be fully implemented in 2015, there is now pressure on the government to protect domestic businesses and impose new restrictive measures on trade and FDI.
The sentiments behind these policies are understandable. Indonesia wants an equitable industrialisation process led by Indonesian entrepreneurs. The Indonesian economy is also sensitive to its current account deficit, which gives the impression that its industrial structure is too thin and dependent on imported goods and services. Trade balance is vulnerable to commodity price shocks as more than half of its export value comes from commodities and natural resources, whereas imports are mainly of capital goods and intermediate products. Indonesia needs to continue facilitating industrialisation to move out employment that is currently concentrated in low productive activities. Some argue that Indonesia should address these issues with less exposure to international markets.
But these concerns are best addressed by pursuing structural reform and taking advantage of further integration with the global economy. Indonesia needs to generate business opportunities to absorb at least two million new workers annually and position the economy to escape the middle-income trap. This requires the economy to exceed the current growth trend of 6 per cent per year, which will be difficult given the prevailing employment growth rate and total factor productivity, and may require doubling investment growth. Given that Indonesia’s gap between savings and investment is already substantial and widening, the additional investment will have to come from an increase in annual FDI inflow from its relatively low current value of 2 per cent of GDP.
Rather than pursuing import substitution to slowly develop a complete manufacturing base at home, Indonesia should participate more extensively in regional and global manufacturing chains. This would allow Indonesia to accelerate industrialisation by taking advantage of natural resource wealth, having FDI pay for capital in the form of factories off-shored to Indonesia and leaving the nation free to focus on investing its own resources in human capital and programs to facilitate local industries climbing up the value chain where the value added is greater.
More openness could also substantially enhance productivity growth. A 2007 study by Mary Amiti and Jozef Konings found that a 10 percentage point fall in import tariffs on intermediate goods led to an average 11 per cent improvement in productivity for Indonesian firms that used those imports as inputs, thanks largely to lower costs. A separate 2009 study by Jens Matthias Arnold and Beata Javorcik suggested that Indonesian manufacturing firms that received capital and technology from FDI experienced, on average, a 13 per cent productivity increase in just three years. Exposing Indonesia’s retail, domestic air transport and telecommunication sectors to greater international competition has also been shown to lead to significant output growth with productive spillover effects on the manufacturing sector.
Some domestic companies may indeed be unable to withstand global competition or benefit from further integration. However, it would be preferable for industrial policy not to protect the inefficient practices of such businesses but to help them address their core constraints and improve competitiveness.
A key issue in this regard is Indonesia’s relatively low public spending on infrastructure and the high cost of doing business. Indonesia must do more to reduce the cost of domestic freight, improve access to energy sources and reduce bureaucracy and regulatory uncertainties so that businesses can adjust rapidly to new opportunities. More competition in backbone and bottlenecked services such as domestic sea freight, broadband communication and energy distribution would help Indonesian businesses be more cost competitive. There is also room for intervention to improve workers’ skills and the capacity of local businesses to innovate.
Indonesia must regain its confidence in economic openness and international integration. Exposure to international economic forces can be difficult to manage at times but is critical for Indonesia to escape the middle-income trap.
Sjamsu Rahardja is Senior Economist at the World Bank office in Indonesia. The views expressed are personal and do not reflect views of the World Bank and its Board of Directors.